Health Insurance Marketplace Notice Requirements

by McCarter & English, LLP

On March 23, 2010, President Obama signed the Patient Protection and Affordable Care Act of 2010 ("PPACA").  Shortly thereafter, the Health Care and Education Reconciliation Act of 2010 ("HCERA") was signed into law.  PPACA and HCERA (collectively, the "Acts" or "Health Care Reform") represent the most significant changes in the health care industry since the adoption of Medicare and Medicaid in the 1960's.  The Acts were intended to expand access to affordable health care - providing individuals without coverage an opportunity to obtain insurance and reducing the overall cost of health care. 

Beginning on January 1, 2014, individuals will have access to affordable coverage through the "Health Insurance Marketplace" ("Marketplace").  The Marketplace will permit individuals seeking health coverage an opportunity to shop for and purchase private insurance.  Marketplace open enrollment is scheduled to begin on October 1, 2013. 

PPACA Section 1512 created a new notice requirement under the Fair Labor Standards Act ("FLSA") that requires employers to issue written notice to their employees containing information regarding coverage options available through the Marketplace.  Recently, the United States Department of Labor issued Technical Release 2013-02 to provide employers with temporary guidance and models to meet this new notice requirement. 

Who Must Issue the Notice?
The notice requirement applies to all employers subject to the FLSA.  Generally, the FLSA applies to employers:

1.    With one (1) or more employees;
2.    Engaged in the production of goods;
3.    Engaged in interstate commerce; and
4.    With at least $500,000 in annual business. 

The FLSA also applies to most hospitals and health care service providers, schools and educational institutions, and government entities. 

Who Must Receive the Notice?
All employees must receive notice, regardless of their status in the employer's health plan (i.e. participants or non-participants) or employment status (e.g. part-time, full-time).  However, employers are not required to issue notice to former employees, dependents, or other non-employees who may be eligible for coverage under the employer's plan.   

What Information Must Be Included?
FLSA Section 18B states that employers must provide their employees with a written notice providing the following:

1.    Basic information regarding the Marketplace, the services provided, and how to contact the Marketplace to request assistance;

2.    If the employer's plan does not meet the "minimum value" requirements, a statement informing employees that they may be eligible for a premium tax credit under Internal Revenue Code Section 36B if they purchase coverage through the Marketplace.  In order to meet the minimum value requirements, the employer plan's share of coverage costs must be at least 60% and the employee's share must not exceed 9.5% of his or her annual household income; and

3.    A statement informing employees that if they purchase coverage in the Marketplace, they may lose any employer contributions made towards coverage offered under the employer's health plan, and that all or a portion of this contribution may be excludable for federal income tax purposes.   

When and How Must the Notice be Issued?
Current employees must receive notice no later than October 1, 2013.  Starting on October 1, 2013, employers are required to issue notice to new employees at the time of hire.  In 2014, employers must provide new employees with notice within 14 days of the employee's start date.

Notice must be provided free of charge and written in a manner calculated to be understood by the average employee.  Notice must be sent either by first-class mail or electronically (if US Department of Labor guidelines are satisfied). 

The model notices can be found on the US Department of Labor website:

Employers are not required to use the model notices so long as their notice contains all required information. 

New COBRA Notice
The Employee Benefits Security Administration has also issued new notice requirements for continuation coverage as well as a new model COBRA notice.  Generally, ERISA Section 606 requires plan administrators to notify beneficiaries of their rights to continuation of health care coverage no later than 14 days following notice of a qualifying event (44 days if the employer serves as plan administrator).  Under the new notice requirements, employers must also inform beneficiaries of the availability of coverage through the Marketplace. 

The model notices can be found on the US Department of Labor website:

Employers are not required to use the model notices so long as their own notices include all required information.  However, employers will be found in good faith compliance with these requirements so long as they properly fill out and distribute the model notice.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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